Natural killer (NK) cells are important mediators of resistance against tumor growth and metastasis. NK cell reactivity is regulated by a balance of signals from activating and inhibitory receptors. While reactivity against tumor cells is beneficial, it is essential that NK cells do not attack normal tissue. The distinction between tumor cells and normal cells is partly made at the level of activating receptors: transformation often results in induction of ligands for such receptors. In addition, NK cells discriminate self from non-self using MHC class I-binding inhibitory receptors. Host MHC class I molecules regulate development of NK cell reactivity and tolerance, a process that is not well understood. Recent data suggest that functional maturation may not be a binary phenomenon: quantitative aspects, with regards to avidity and frequency in interactions between developing NK cells and normal cells, may be important for the generation of NK cells that are 'tuned' to optimally sensing the absence of self-MHC class I. In this article, we discuss models for development of NK cell reactivity and tolerance. Our understanding of this process may have significant implications for the use of NK cells in cancer therapy.